Inflation And Investments

Here's a little story why it is important to invest, and that even the best investments can be affected by inflation. Let's say you are very risk averse and do not want to invest a portion of your savings in stocks or bonds, even. So, you keep it in your mattress.

The problem is that you'll lose a certain amount of purchasing power each year that you hold in your mattress. Yes, of course, in a sense. But in a second time, your money is devalued.

So you say put it in a savings account that gives a 2% per year. Your money is technically more and more, but if inflation exceeds 2%, you're still losing money. So keep all your money is a savings account is not a good idea over time.